London Metal Exchange Critics Push for Transparency

In the contentious debate about the future of the London Metal Exchange, there’s at least one area of common ground: the LME needs to make its trading data public.

The LME, home of global benchmark futures contracts in copper, aluminum, zinc and other metals, is in the midst of a two-year controversy over logjams in its warehousing system. Companies like Coca-Cola Co. and aluminum products giant Novelis Inc. have complained since 2011 that bottlenecks in the LME’s global warehousing network were raising their costs.

In July, the LME took its biggest step yet in response to those complaints, proposing a rule that would require warehouses home to long delivery lines to deliver out more metal than they take in.

The one change both sides of the industry seem to agree on is a requirement that the LME begin releasing reports on how traders are positioned in its markets.

U.S. commodity exchanges have long been required to release periodic batches of anonymous trader positioning data, offering the market a window into the way banks, hedge funds, producers and manufacturers were betting on prices.

A predecessor of the Commodity Futures Trading Commission started releasing annual reports on hedging and speculation in U.S. grain futures contracts in 1924. The U.S. commodity-market regulator has since ramped up those disclosures, increasing their frequency to monthly, and eventually weekly reports. Their coverage was expanded, too, to non-grain commodity futures like crude oil and gold, as well as foreign exchange futures.